Mortgage holders worried about going into arrears following Irish Life & Permanent's (IL&P) interest-rate hike should brace themselves for an even bigger and sudden increase when recovery kicks in, a mortgage broker warned last week.
The IL&P 0.5% increase on variable-rate mortgages prompted calls for the withdrawal of its government guarantee. A spokesman for the bancassurer said the company is making the move in an effort to minimise its losses this year, adding withdrawing the guarantee would only send mortgage rates higher.
Frank Conway, director of the Irish Mortgage Corporation, said consumers are likely to suffer an even bigger hit once the European Central Bank sees real recovery taking place. "[The ECB] will jump rates quite substantially at the first signs of recovery. There are already warnings that we could have a period of hyper inflation," he said.